Nestlé acquires Pfizer’s infant nutrition unit for $ 11.85 billion

A world giant of infant nutrition well settled on emerging markets

04/23/2012. Nestlé acquired the 5th largest infant formula business in the world. The new entity will benefit from the strategic implantation of Pfizer nutrition on emerging markets.

After months of talks, Nestlé acquires Pfizer nutrition unit for $ 11.85 billion, beating Danone’s $ 11.6 billion offer. Pfizer is ranked fifth largest infant formula business in the world, with an expected revenue of $ 2.4 billion in 2012. By acquiring this unit, Nestlé reinforces its leader position on a fast growing market (+10% per year according to Euromonitor), increasing its infant formula sales from $ 5 billion to $ 7 billion.

In a press release, Nestlé CEO, Paul Bulcke said: “Infant nutrition has been at the heart of our company since it was founded in 1866. Pfizer Nutrition is an excellent strategic fit and this acquisition underlines our commitment to be the world’s leading nutrition, health and wellness company. Its strong brands and product portfolio, its talented people dedicated to the success of its business, together with its geographic presence - 85% of its sales are in emerging markets - will complement our existing infant nutrition business perfectly. The combined entities will enable us to deepen our engagement with consumers, offering them a wider choice of nutritious food to ensure their children make a healthy start to a healthy life.”

The acquisition will add Pfizer strong brands (S-26 Gold, SMA, Promil) to Nestlé existing portofolio: Nan, Gerber, Lactogen, Nestogen, Cerelac. And it will reinforce Nestlé strategy on emerging markets. Especially in China, where Pfizer has a 7.4 % market share behind the leader Mead Johnson (11.7 %) and Danone (9,8%). The new entity will now be ranked 3rd with 9.7% market share in China, where Nestlé has been loosing shares since melamine scandale in 2008.

Nestlé is getting stronger in its historic market. Henri Nestlé, founder of the company, is also the inventor of one of the first artificial infant milk formula, “farine lactée Henri Nestlé”, launched in 1867.